Field of the Invention
The present invention relates to techniques for modeling roof age of a structure, which techniques can be used in the homeowners insurance industry in providing more accurate insurance coverage and risk analysis. More particularly, the present invention relates to a computer-implemented method for modeling roof age of a structure based on a generalized linear model employing one or more variables that influence roof age determinations.
Description of Related Art
The cost of replacing a roof due to wind, hail, or other weather damage can be significant and depends on the type of materials being replaced. For example, the cost to professionally remove and replace asphalt shingles, the most common type of roofing material, can exceed $8,000 for a typical ranch style home. The cost to replace more expensive materials such as metal, tile, or slate can reach into the tens of thousands of dollars. Further, roof damage is present in 85-95% of wind-related insured property losses each year, according to the Insurance Institute for Business & Home Safety (IBHS), and loses from thunderstorms cost insurers $14.9 billion in 2012, according to the Insurance Information Institute.
As a typical homeowners insurance annual premium is only the fraction of the cost of a roof replacement, replacing a roof can be an expensive proposition for insurance companies. Although damage from wind, rain, and hail are typically covered by insurance policies, many insurance companies are taking steps to mitigate their losses. Because older roofs may be considerably weaker and thus more prone to damage, some insurance companies will not underwrite a policy with roof coverage for a home with a roof age over a certain limit. Also, some companies will only reimburse a depreciated value for a roof if it exceeds a certain age, such as ten years. Further, damage due to normal aging and wear and tear is typically not covered under home insurance policies. Thus, accurate information on the age of a roof at the time an insurance contract is underwritten is of considerable value to insurance companies.
Homeowners insurance companies have traditionally relied on the homeowner to provide roof age information at the time of underwriting. However, homeowner-supplied information on roof age is often based on inaccurate information or misrepresented (since homeowners have an incentive to underestimate roof age), and is not validated by insurance companies. Research by the present inventors has shown that more than two-thirds of all homeowner-supplied roof ages are underestimated by more than five years, and that more than twenty percent are underestimated by more than fifteen years (See Emison and Tachovsky, HomeownerSupplied Roof Age is Disastrously Wrong, Claim Journal, 2013).
These underestimates can result in significant loses for insurance companies when underwriting or managing a homeowners insurance policy, paying claims, or determining premiums. Thus, there is a need in the insurance industry for more accurate methods for estimating roof age of a property. To this end, methods of the invention aim to solve this business challenge by providing a more realistic roof age of a property based on a per-property modeled roof age.